loanDepot’s VA mortgage restrictions lifted

by Ryan Smith26 Jun 2019

After nearly six months, Ginnie Mae has removed restrictions barring loanDepot from including VA loans in some GInnie-backed mortgage securities.

In January, Ginnie Mae issued a restriction limiting loanDepot to Ginnie Mae II custom pools for VA single-family guaranteed loans. With the restriction lifted, loanDepot is again eligible to utilize the Ginnie Mae I and Ginnie Mae II multi-issuer securities programs.

The restriction was part of an ongoing Ginnie Mae effort to combat churn in VA loans. Churn occurs when lenders push borrowers to refinance their loans unnecessarily. The practice can leave borrowers stuck with thousands of dollars in unnecessary fees.

Ginnie Mae looks askance at issuers who produce pools of loans whose prepayment activity is substantially different from comparable loan pools. Last year, Ginnie placed similar restrictions on Freedom Mortgage, SunWest Mortgage and NewDay USA.

loanDepot said when the restrictions were issued that it disagreed with Ginnie’s decision. “In 2018 alone we helped 5,358 veterans become homeowners, an achievement in which we take great pride,” the company said in a statement at the time.

Ginnie Mae said that it lifted the restrictions because loanDepot has demonstrated that “its prepayment speeds are substantially in-line with those of equivalent multi-issuer cohorts” and that “such improved performance is sustainable.”